Budgeting Basics
What is the difference between a need and a want?
A need is something you must have to live; a want is something nice to have.
What is credit?
Borrowing money now and paying it back later.
What is the purpose of saving money?
To use it for future needs or emergencies.
What is income?
Money you receive
You get $20. Should you spend all of it or save some?
Save some.
What do we call a plan for how you spend your money?
A budget.
What is the number that shows how responsible you are with credit?
A credit score.
What is compound interest?
Earning interest on your money and on the interest you already earned.
What is an expense?
Money you spend.
Your phone breaks. What is the smartest first step?
Check your savings or look for an affordable option.
What should you do before making a big purchase?
Check your budget and make sure you can afford it.
What is interest?
The extra money you pay when you borrow.
What is a savings account good for?
Keeping money safe and earning a little interest.
What is “net income”?
The money you take home after taxes.
You want new shoes but rent is due. What should you pay first?
Rent (a need).
What is the first step of creating a budget?
Tracking your income and expenses.
Why is paying bills on time important?
It helps keep your credit score high.
What is the main difference between saving and investing?
Saving is low risk; investing can grow more but has higher risk.
What is inflation?
When prices go up over time.
Your car needs a $300 repair. What should you use: savings, credit card, or a loan?
Savings (to avoid debt).
What is one common budgeting mistake that people often ignore?
Forgetting about small purchases that add up.
What happens if you only pay the minimum on a credit card?
You stay in debt longer and pay more in interest.
What is a diversified investment?
Spreading your money across different things to lower risk.
What is an asset?
Something you own that has value (like money, property, or a car).
You earn $60 a week from a part-time job. You want to save $200 in one month for a school event. What is the smartest plan?
Make a budget to save most of your weekly income (about $50 each week) and cut back on non-essential spending so you can reach $200 in time.